been made in the talks between the white house and the house over the last two weeks. gwen: each side drawing lines in the sand, now testing the other. some republicans peel off. >> my view is 98% of my constituents certainly don't need a tax increase. gwen: some dig their heels in. >> seems like our friends on the other side are having some difficulty kind of turning off the campaign. gwen: the standoff extends to presidential appointments, as u.n. ambassador susan rice struggles to defuse opposition to her possible nomination to secretary of state. >> i relied solely and squarely on the information provided to me by the intelligence community. >> i would just ask the president to step back for a moment and realize that all of us here hold the secretary of state to a very different standard than most cabinet members. gwen: who will win the first

rounds of the post-election battle? covering the week, gloria borger of cnn, susan davis of "usa today," and mike viqueira of nbc news. >> award-winning reporting and analysis, covering history as it happens, live from our nation's capitol, this is "washington week" with gwen ifill, produced in association with "national journal." corporate funding for "washington week" is provided by -- >> this rock has never stood still. since 1875 we've been there for our clients through good times and bad. when their needs changed we were there to meet them. through the years from insurance to investment management, from real estate to retirement solutions, we've developed new ideas for the financial challenges ahead. this rock has never stood still, and that's one thing that will never change.

prudential. >> wherever our trades negotiation the economy comes to life. norfolk-suffolk, one line, infinite possibilities. >> additional corporate funding is provided by boeing. additional funding is provided by the anenburg foundation, the corporation for public broadcasting and by contributions to your pbs station from viewers like you. thank you. once again, live from washington, moderator gwen ifill. gwen: good evening. perhaps you took a break for the

holidays. perhaps you gave thanks that the election was ofrlte then you dialed back in this week and discovered, no, we have apparently just entered a new phase in a political year that never ended. two big stories this week -- the impending fiscal cliff and the washington debates over who will succeed hillary clinton as secretary of state. first to the fiscal cliff. at the end of the year the buescher ra tax cuts will expire and the first wave of $1.2 trillion in spending cuts is scheduled to kick in. c.e.o.'s and economists alike are worried this will send the economy spiraling back into recession. the solution, $1. trillion in new revenue, much to come from raising taxes on wealthy americans. >> if congress does nothing, every family in america will see their income taxes automatically go up on january 1. every family. everybody here, you'll see your

taxes go up on january 1. and it's not acceptable to me and i don't think it's acceptable to you for just a handful of republicans in congress to hold middle-class tax cuts hostage simply because they don't want tax rates on upper-income folks to go up. gwen: house speaker john boehner's response, no way. they are, he said, at stalemate. >> the white house spends three weeks trying to develop a proposal, and they send one up here that calls for $1.6 trillion in new taxes, calls for a little -- not even $400 billion in cuts, and they want to have this extra spending that's actually greater than the amount they're willing to cut. i mean, it was not a serious proposal. and so right now we're almost nowhere. gwen: both ends say americans voted for growth and responsibility during the last election, but each apparently is

read looking the same message differently. what a surprise. so how much of the policy is about standoff and how much is about politics? >> it's a little bit of each. but i would have to say right now it's a lot about politics and it's a lot about political theater. you just showed these guys. ok, so they have given their opening round. we all know where they stand. this is for the base of their parties now, which the president, of course, has been meeting with his liberal base, republicans have been meeting with conservatives who say don't cave. they've all been meeting with c.e.o.'s, they're taking the show on the road, as the president did. so this is sort of that moment where they're kind of getting ready to do battle, because i would argue when they finally do get in that room, they all know what has to be done. the question for them is how do you talk about revenues? how do you talk about it? do you have to raise the rates?

which, of course, the president says you have to do, or can you find the money in a different way, as republicans say? or changing deductions, right? or capping deductions for the wealthy. so we all know there are different ways to do it. we just wish that you could wake us at the moment they actually decide to get to work. gwen: mike, so you were with the president today, he took this on the road and went to pennsylvania at a toy company at christmas times. >> great pictures. gwen: great picture. and said what? >> i think the election is over but the campaign goes on. keep in mind these are the classic sort of suburban counties that are swing counties that decide elections not only for the control of the house and the senate but, of course, the presidency. i don't think he's too worried about that at this point. gwen: but that he won, yes. >> he's not there for electoral votes, but he's there to move votes in the house of representatives.

sue can tell you there are three moderates, republicans, who represent three of the four districts that surround philadelphia to the west. i think that was clearly part of it. i think the opening gambit, if you will, from the white house over the course of the last couple of days, when tim geithner and rod abc news, the whost lie yay son went up and -- white house liaison went up there, says, number one, we're still in the exhibition season and number two, the white house, do they think they still have the upper hand politically? gwen: which they do, by the way. >> are they going to drive the advantage? republicans are in disarray. they're like a civil war general. they're going to chase him into the woods and try to rout him now that they have the chance. gwen: sue, december 1 is tomorrow. he says we're still in the exhibition season but there are not that many days left. how is that shaping up? >> four weeks is a really long time, whether we like it or not in legislative negotiations on the hill. your point, which is a good one, is i think the white house feels

very confident of their negotiating hand. republicans on the hill are angry about it. i don't think that they're at a point where they feel like they have to give on what president obama said he won this election on, which is having wealthier americans pay higher tax rates. they want to talk about entitlements and this and that, but the tax rates on the rich are more about just this policy debate. there's sort of this philosophical thing of i won the election, and obama -- i don't see any scenario by which he's going to back down. >> one of the things he did which i found interesting, which seems an unnecessary poke in the eye was to say, you know what, as part of this deal i think we should not have congress anymore have to approve raising the debt limit. that was certainly -- >> well, when you go into a negotiation you don't come in with your compromise to start. you kind of have to start at 10 to get -- and it never worked for him before. but the offer from mitch mcconnell, the minority leader, said he laughed at timothy geithner when he presented this

offer. but you have to sort of start from your negotiating ground to get to the middle. i will say that it was rejected out of hand on capitol hill, so it's not necessarily a good start. and i would say, at least from the republican view, it puts them off when obama goes on the road and does this. there's a sense of why not keep drawing them back over the white house? >> the white house -- i mean the president sort of can't win on that. remember the health care debate? >> right. >> it's always the communicators. what you need to do is go out and sell it to the public. he went out and sold it to the public or tried to sell it, and, i mean, he got the bill passed, obviously. but it's always the communicators. it really is. he said he had to change washington from the outside but he is really playing on the inside. >> it's reminding of public exactly what they voted for. 67% of the american public believes that there should be a plan that combines tax increases and spending cuts. over half the population wants

to increase taxes on the wealthy. he's got the public on his side and he'll remind them of it. gwen: and said the consequences of asset conversion. >> he's read the literature. in 1864 lincoln had the cabinet room, he coca jolly, twist arms and maybe even threat. 1964 l.b.j. had the oval office to dot exact same thing. now what does the president have? the end ofer marks. he's got twitter. #my2k. >> fiscal cliff was a problem washington created. this is not the 2008 financial crisis where the markets started to crumble and washington had to act. they created this problem. i think one of the reasons why this is so closely watched and we're all so intrigued in it is there's a much bigger fight on the horizon looming, which is the debt limit. part of the reason why people are watching is if they blow up fiscal cliff, if we go over, if

this is chaos, if they punt, if it's a small deal, it's going to be a sign that we're not going to get the deficit reduction that we need. >> and that's the challenge for the president. because, yes, he does have all the leverage. we talked about that. he won the election of course. but this is a test of leadership, and the american public does not want to go over that cliff because, by the way, they want the tax cut for the middle class to remain in place. that's the ultimate cliff there and the bottom line is we don't want those to expire. gwen: as we approach it we begin to try to read the tea leaves. he brings the c.e.o.'s to the white house and they had the goldman sachsco guy saying i'm pretty optimistic we'll come up with a deal. and others think we'll good over the cliff. what do we read into that? >> there's a rule that denny has earth enunciated and people are outraged.

it's a majority institution. the speaker is not going to put something on the floor that doesn't get a majority of the majority. if john byner puts something on the floor that raises taxes, they're going to explode. >> you could do it in two steps. you could do kick a very big can down the road. gwen: which is basically what the president is saying. >> the republicans don't want to do that, because they feel if they dot middle class they lose all their leverage, or do what chin don used to do, which is not with a majority of each party but the leaders have stow be leaders. >> i want to see it. gwen: you make a good point about leadership is that people are waiting to see who wins, who has the upper hand in an argument like this, because there are other post-election standoffs brewing. another one that continues to brew is who will take over when hillary clinton steps down as secretary of state. the president has come to the strong defense of his rumored frontrunner -- say that three times fast -- rumored front run ir, united nations ambassador, susan rice.

>> susan rice is extraordinary. couldn't be prouder of the job that she's done. [applause] gwen: by the way, that was hillary clinton who started that round of applause around the cabinet table. but if they're applauding on capitol hill, they're doing it very quietly, as republican senators make their doubts known loud and clear. at issue -- rice's role in providing a preliminary and ultimately incorrect explanation of the circumstances surrounding the attack on the u.s. mission in benghazi, in libya, that resulted to the death of four americans including the u.s. ambassador. >> bottom line -- i'm more disturbed now than i was before that the 16 september explanation about how four americans died in benghazi, libya, by ambassador rice, i think does not do justice to the reality at the time, and in hindsight clearly was completely wrong. but here's the key -- in real time it was a statement

disconnected from reality. gwen: back to our original question, gloria, which we asked about the fiscal cliff, which is, how much of this is about policy, how much of it is about politics? >> again, i'd have to give you the same answer. i think it's about policy partly, clearly on the part of lindsay graham and john mccain. but a lot of it is about politics. they didn't get the chance that i think that a lot of them wanted to during the campaign, because mitt romney actually did not lead the charge on benghazi. john mccain led the charge on benghazi. and they have a sense -- there's nothing you can do to a senator to keep them out of the loop. and there is a sense there that not only were they not told the truth, but the american people were not told the truth and they decided -- i mean the white house calls it an obsession. jay carney has called it an obsession. but i do believe that there are lots of republicans who don't

want her to be the secretary of state. and whoever thought there would be a republican caucus to get john kerry -- gwen: well, if you're a member of the senate you're part of the club and that's probably what's going on. but i'm curious about the folks at the white house, mike, it seems to me the people at the white house are trying to decide if it's worth it. >> i don't often say this, because every time i think it i end up being wrong. but i think there's a visceral aspect of this. i think the president, when this came up in his first post-election press conference was genuinely upset. come after me, come after me, almost like a joe pesci moment there. gwen: right, right. and if it would have been anybody other than john mccain it wouldn't have been quite the same. >> which also may have pushed the presidential buttons as well. i think that there is a strong contingent among the upper echelon at the state department

and at the white house that think that president should go forward with that nomination. gwen: should? >> should. i think there are others who say let's not pick this fight now. we have plenty to work on you the upcoming fiscal cliff and immigration. i think when susan collins appeared after a meeting, i believe it was on wednesday, who, you know, is not exactly a red meat republican who voted for the stimulus, for crying out loud. there were onlyly republicans to do so. came out and expressed reservations about susan rice. that was a red flag. gwen: let me ask you about what's happening on the hill. we have heard quite loud and clear from people like kelly ayot, john mccain and lindsay graham, and where are her defenders? >> i think there are an element of defenders. i don't think there is much out there because she hasn't been nominated to anything yet. it's a weird argument because it's about someone that we're not sure is going to get nominated to a position.

but one of the facts that democrats bring up a lot is that if the issue is that she misinformed congress or misled, that they draw a parallel to condoleezza rice and she misinformed or misled on iraq and she still had the support of people like hillary clinton and barack obama, and there's a question of should the president have people in his cabinet that he wants to have in his cabinet? there is this visceralness about it. it's very interesting that mccain has taken the lead. he has very strong views on this and it comes back to his former 2008 opponent. susan rice was a very strong critic of john mack contain and his foreign policy views. gwen: and he was close to chris stevens, the ambassador. >> i think there's a lot of personal feelings there. gwen: how much of it is about what the u.n. ambassador said on a talk show and how much of this is about what the intelligence department didn't do and what the state department didn't do? >> you're 100% right.

i mean, i talked to republicans this week about this, and foreign policy expert republicans, who say why are we picking this fight? what we need to be asking is did the intelligence community decide to use the different language because they were playing politics, or did they not know? we've heard that general petraeus said that he immediately assumed that this was a terror attack from al qaeda. so the question is this republican said to me, why are we making this about her? this needs to be about something bigger that is actually bigger than susan rice. did we get it wrong? did we pay no attention to it because there was an election? i mean, those are very important issues that of course -- >> and didn't it feed those suspicions when after they had testified there was a clarification issued by the

intelligence community as to who actually changed the intelligence? after susan rice had gone up there and -- with mike more rell and made this presentation, later in the afternoon they came back and clarified exactly how it all transpired in the organization. gwen: there's still, no question, a lot of unanswered questions about benghazi. i wonder whether this is going to be the real avenue for it or whether folks are just trying to get to something else. >> it's also curious, because -- and we talked about this earlier, but where is hillary in all of this? gwen: i don't know. >> it's partly making me think this is all about politics. they were trying to answer these big questions. why isn't the secretary of state being brought in to capitol hill? >> we can go further back than that. why didn't she go to -- >> right, there's an element of theatrics. >> she doesn't like to do sunday shows, as you know. but susan collins raised that exact question, which is, why were you putting the u.n.

ambassador out there? gwen: and then defend her by saying, oh, she didn't know anything. >> right. and that's the point. >> saying she was doing what she was told. gwen: there are two questions here. one is whether in fact there's any precedent for the president's pick being rejected, if he were to pick her and whether there are the votes to do that. not clear yet. but also, just like with the fiscal cliff. is there something going on away from the cameras that's not going on in front of the cameras? are there conversations being held? are there, oh, come on, we know what we're going to do. is that happening on any level that we can tell? >> i think on the fiscal cliff, the president and john boehner spoke of the weekend. i think it was the second consecutive weekend when they spoke. 28-minute conversation, variously described as curt or short. people already suspect that boehner's strong reaction against the proposal that was sent up today was something they planned together, because now boehner can say this crazy, outrageous proposal, and i don't think so. i'm very pessimistic about a

resolution. i might be one of the only ones. >> i am, too. given everything that we've covered over the last couple of years, you saw what happened with the debt ceiling, for example. i mean, there was, in the lame-duck session after the 2010 midterms, there was sort of a productive lame-duck session. but then again, the president was accused of caving. so the bush tax cuts were extended. >> the atmosphere has not changed despite the electric, in that we do live in a washington right now where we don't do big things anymore. they take too much leadership, it's incremental. i'm pessimistic about this idea that we'll have a grand bargain. i don't think it's going to happen. gwen: but they're up against the wall. >> but they know how to punt. gwen: we're going to keep talking about this off the air. but we have to leave a few minutes early to give you the chance to support your local pbs station, which in turn supports us. but the conversation, as you can

tell, will continue, and it will be online on the "washington week" webcast extra, where we'll talk about what they're calling the obama-romney turkey chili summit. you know you want to see that. before we go, we want to send out fond retirement thank you're, lynn allison, al, mike smith and ken u p uhara who share more than a century of service all together here in washington. enjoy your friday nights, guys. let us know what it's like. we'll see you right here again next week on "washington week." good night. captioned by the national captioning institute --www.ncicap.org-- >> funding for "washington week" is provided by -- >> we know why we're here. to connect our forces to what they need, when they need it. >> to help troops see danger before it sees them.

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